As part of an effort to fix an ailing business, Blockbusterscaled back their big spending marketing campaign to compete with Netflix mail order DVD rental service. The first order of business for Blockbuster CEO Jim Keyes was to fix the stores. Now rumors suggest Blockbuster is gearing up to fight Netflix again only this time the battlefront is different. In the new frontier, instead of targeting mail-order, Blockbuster is reportedly aiming for the digital landscape.

Blockbuster’s spokespeople declined to either confirm or deny the story. They did, however, acknowledge that their intent is to offer a wider array of movie distribution services than the current slate.

“We’re talking to numerous companies and vendors about products, services, alliances and initiatives that can help us achieve our mission to transform Blockbuster into a company that provides access to media content across multiple channels,” a spokeswoman said. The channels, she further elaborated include “stores, by mail, through kiosks, through downloading [and] through portable content-enabled devices.”

That mobile service is the “portable content-enabled devices” channel Blockbuster’s spokeswomen mentioned. Kiosks have also been announced previously. If the download service turns out to be more than just a rumor, it will represent the one channel so far undisclosed: downloading. It will also represent a far more logical application of the Movielink assets.

Between Blockbuster and Netflix, reports hint the two companies are exploring different approaches. Blockbuster’s proposed offer is likely to be a standalone hardware device. Like a similar offering for Vudu, consumers will have to buy the box to use the rest of the service. Reports say there is no intention to focus on embedding software. Netflix, in contrast, has expressed interest in licensing their software application to a wide range of hardware manufacturers. Their plan seems to be to make accessing Netflix on-demand as easy, and ubiquitous as possible. They will then likely share some portion of revenue with device makers.

Despite showing some hint of financial improvement in March earnings, shares of Blockbuster remain in the cellar. The company’s shares closed Thursday at $3.25, not much better than an all time low of $2.66 hit earlier this year.